Western Digital mulls options as Tosh favours Bain

Western Digital has said that it is considering its options as Toshiba indicated it favoured a group of investors led by Bain Capital to buy the world’s second largest manufacturer of flash memory chips.

Toshiba said it had signed a letter of intent to negotiate with Bain and its partners, the Innovation Network Corporation of Japan and the Development Bank of Japan, both of which are controlled by the Japanese government.

Toshiba has been wavering among offers from three different groups to buy a portion of the chip business, a deal that is widely expected to be worth more than $20 billion.

In its announcement, Toshiba said the Bain group had submitted a new bid, putting it ahead of rivals led by Western Digital, the digital storage company based in the United States; and Foxconn, the contract manufacturer based in Taiwan that makes phones and other devices on behalf of Apple and other global brand names.

It said it hoped to conclude a deal by the end of September, but it added that the negotiations would not be exclusive. That means Western Digital or Foxconn could still turn the tables by submitting new, sweetened offers.

But Western Digital, which also wanted to be involved, said that Toshiba’s statement was disappointing.

“We are disappointed that Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders. Throughout our ongoing dialogue with Toshiba, we have been flexible, constructive and have submitted numerous proposals to specifically address Toshiba’s stated concerns. Our goal has been — and remains — to reach a mutually beneficial outcome that satisfies the needs of Toshiba and its stakeholders, and most importantly, ensures the longevity and continued success of the JVs”, the outfit said.

A spokesman said that it was surprising that Toshiba would continue to pursue a transaction with a consortium led by Korea-based SK Hynix Inc. and Bain Capital Japan without SanDisk’s consent, as the language in the relevant JV agreements is unambiguous, and multiple courts have ruled in favour of protecting SanDisk’s contractual rights.

It said that it was confident in its ability to protect its JV interests and consent rights.

So in otherwords it might end up fighting the merger. Western Digital’s arbitration requests filed on May 14, 2017, and July 5, 2017, continue to move forward in the ICC International Court of Arbitration.